PayPal entry punishes Australia’s pricey buy-now-pay-later stocks By Reuters

PayPal entry punishes Australia's pricey buy-now-pay-later stocks By Reuters


© Reuters. FILE PHOTO: The PayPal logo is seen at an office building in Berlin

SINGAPORE (Reuters) – Shares in Australia’s Afterpay Ltd (AX:) and its smaller consumer lender rivals tumbled for a second day on Wednesday, as the entry of U.S. giant PayPal into the buy-now-pay-later sector sent investors scrambling to re-price its frothy stocks.

Afterpay fell as much as 12.4%, before paring losses, and has shed about A$2.4 billion ($1.8 billion)in market capitalisation in the two trading sessions since PayPal Holdings Inc (O:) said it would offer small, short-term loans to U.S. customers.

“Having such a large customer base already in the U.S., PayPal certainly throws a spanner in the works for their expansion plans,” said James Tao, a market analyst at CommSec in Sydney.

Rivals also tumbled, with Zip Co Ltd (AX:) dropping as far as 17.7% and Sezzle Inc (AX:) 15.5% before both trimmed losses. They have each lost more than 23% in two days. Openpay Group Ltd (AX:) and Splitit Ltd (AX:) each fell about 9%.

Afterpay and other alternative credit firms, which offer small instalment loans to shoppers and make money by charging merchants a commission, are riding the boom in online shopping that has been sparked by the coronavirus pandemic.

The United States is regarded as the sector’s largest growth market and is a key focus for most of the Australia-listed buy-now-pay-later companies.

PayPal’s U.S. offering is a fee and interest-free loan for purchases between $30 and $600, repayable in four instalments over six weeks.

That is broadly similar to Afterpay’s product, which has proven popular enough among millennials to convince investors of its growth potential.

A 900% rally in the share price since March has catapulted the company into Australia’s top 20 largest listed firms, even though it has never turned a profit.

Afterpay, Zip Co, Sezzle, Openpay and Splitit did not immediately respond to emailed requests for comment. Zip Co’s CEO was quoted in the Australian Financial Review as saying his firm expected and is prepared for more competition.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME